Dollar Steadies After Dip From Weak Jobs Data

The dollar started the Asian session flat following its slide against major currencies after June’s soft jobs data. The weaker-than-expected increase in nonfarm payrolls and muted average hourly earnings put into question the average consensus of economists that the Fed will start raising interest rates in September.

Asian markets were mixed on Friday as the US data and worries over Greece’s referendum kept investors nervous. Chinese stocks had another bad session as the Shanghai Composite and CSI 300 index were down by over 3% in late trading. China’s securities regulator said it will investigate any suspected manipulation of futures short-selling. Earlier in the day, the HSCB/Markit services PMI showed a slowdown of activity in June with the index falling to 51.8 from 53.5.

The euro was relatively stable in Asian trading as markets are cautious ahead of Sunday’s referendum in Greece on the creditors’ latest bailout proposal. The latest polls are indicating that the vote is split, with the “Yes” vote slightly ahead. The European Central Bank, which has so far maintained its emergency liquidity lifeline to Greek banks, will meet on Monday to discuss what action to take following the outcome of the referendum. But in an unexpected move, the ECB surprised markets on Thursday by extending its quantitative easing program to include state-backed corporate bonds to its list of eligible asset purchases.

The IMF put pressure on Eurozone leaders after publishing a report which said that Greece will require €60 billion in new aid. Greece’s debt projections show that at current levels, debt as a % GDP is unlikely to fall to sustainable levels without some form of debt relief or restructuring.

The euro was trading in a tight range against the dollar as it steadily climbed to 1.1095, having briefly topped the 1.11 handle. It also moved higher against the pound at 0.7109. The dollar was steady against the yen at 123.07 following its sharp fall yesterday. Meanwhile, the pound firmed slightly against the dollar at 1.5613. But the aussie bucked the trend against the greenback as it plunged to 0.7582 after May retail sales came in at 0.3%, against forecasts that they would rise by 0.5%, raising expectations of further rate cuts by the RBA.

With US markets closed today for Independence Day, the rest of the day is looking very quiet with only Eurozone retail sales and UK services PMI to keep investors busy.